Cutting the tax wedge requested by the governor of the Bank of Italy, Ignazio Visco, “we have already done it: it was the first measure of the Renzi government. We will certainly continue to cut taxes on labor and businesses: I do not exclude the possibility that the cut in thePersonal income tax. Every Stability law has a component of tax cuts which are partially covered with spending cuts and allow us to support demand". The Treasury Secretary said Wednesday, Pier Carlo Padoan, in an interview with Sky Tg 24, then reaffirming the government's commitment to defuse the safeguard clauses, which are worth 15 billion in VAT and excise duties.
The minister also confirmed the cut of theIRES already approved for 2017 and opened up the possibility of guaranteeing 80 euros even to pensioners with the lowest allowances, explaining however that "choices will have to be made", because public finance does not allow for intervention on all these fronts at the same time.
As for the reorganization of tax expenditures, “on the subject of the policy of tax benefits it is a matter of understanding whether at the end of the operations each individual will be better off or worse off – continued Padoan –, but there is an opportunity to simplify the tax system and increase the citizens' disposable income”.
On the side of the debt, according to the minister “what matters is the dynamics: in our case it has begun to decline. Privatizations may be small if seen as a snapshot, but in reality they are important both for debt and for exposing companies to market valuation. What is happening in Poste proves it. We are already working on various hypotheses on the railways: the intervention will arrive in 16-18 months”.
On the subject of pensions, “we are examining various possibilities to increase outgoing flexibility – said the number one of the Treasury -, for example with the financial contribution of banks and insurance companies, but also that the sustainability of long-term accounts is linked to the social security system. The impacts on the labor market will also have to be evaluated: it is not automatic to create new jobs because someone retires a year earlier".
To a question about constitutional referendum, Padoan replied that the changes to the charter "have an enormous impact on economic policy, not only because they reduce the costs of politics, but also because they increase the effectiveness of government action, guaranteeing a certain time horizon for legislative activity" . In the event of a rejection by the voters, Renzi has reiterated several times that he will abandon politics and “if the head of a government goes home, the whole government goes home – underlined the number one in via XX Settembre -. My horizon is to go back to university”.
Regarding the abolition of Equitalia, for the minister “the key concept is the friendly relationship between the taxpayer and the administration: trust must be restored. In this context, efficiency is increased and the role of tax agencies is rethought”.
Finally, a word on the Brexit, which “would be a very serious problem, because it would plunge all of Europe into a phase of uncertainty: one would enter into problematic negotiations and then what I call political contagion would begin. It could be as much a threat to European integration as was the debt crisis in 2012”.
